The formula everyone half-remembers
Break-even units = fixed costs ÷ (price − variable cost). The denominator is the contribution margin: what each sale contributes toward fixed costs after its own variable costs. At 45 price and 27 variable cost, each unit contributes 18, so 8,000 of fixed costs needs 445 units.
Why contribution margin is the real metric
It tells you how much room you have to discount. A product with 18 contribution can absorb a 5 discount and still contribute 13; one with 4 contribution cannot. Any price below variable cost means every sale makes the loss bigger — the calculator flags that by returning infinity instead of a number.
Where sellers misapply it
- Treating ad spend as variable when it is really a fixed budget — decide which, then be consistent
- Forgetting marketplace fees: put them in the variable cost line
- Ignoring time: break-even units per month is a different question from per year
- Assuming break-even means safe — it means zero profit, not a business
From break-even to target profit
Add your profit goal to fixed costs and divide again: (fixed + target) ÷ contribution. That is the volume you actually need, and it is usually a sobering number.
Frequently Asked Questions
What counts as a fixed cost?
Anything you pay regardless of volume: rent, salaries, software subscriptions, insurance.
Do marketplace fees belong in variable cost?
Yes — they scale with each sale, so they reduce contribution margin.
What if contribution margin is negative?
Price is below variable cost; every unit sold increases the loss. Raise price or cut cost before scaling.
Assumptions & disclaimer
Results are estimates for planning. Fee schedules, tax brackets and deduction limits change; confirm current figures with the marketplace, the IRS or a qualified accountant before making decisions. Nothing here is financial, tax or legal advice.
Privacy & Your Data
BizCalcTool runs entirely in your browser. The figures you enter are never uploaded, stored or shared — there is no backend to send them to.